NOTES PAYABLE

Notes Payable

–

Related Party

The Company had

two

separate outstanding promissory notes with First Francis Company Inc. (“First Francis”), which were originally issued in

July 2016

in connection with the acquisition of Federal Hose Manufacturing (“Federal Hose”) and which were amended in

July 2018

in connection with acquisition of CAD. The

first

promissory note was issued with original principal in the amount of

$2,000,000,

and the

second

was issued with original principal in the amount of

$2,768,662.

The promissory notes each had an interest rate of

6.25%

per annum, which was increased from

4.0%

per annum as part of the

July 2018

amendments to the Credit Agreement.

In connection with the Komtek Forge acquisition, on

January 15, 2021,

the Company refinanced the outstanding First Francis promissory notes in the aggregate amount of

$2,077,384,

including accrued interest payable through the refinance date and combined this amount with an existing First Francis promissory note carried by Komtek Forge in the amount of

$1,702,400

into

one

note for a combined

$3,779,784

loan due to First Francis Company, payable in quarterly installments beginning

April 15, 2021.

The interest rate on the refinanced loan remained at

6.25%

per annum. First Francis is owned by Matthew Crawford, who serves on the Board of Directors of the Company, and Edward Crawford, who served on the Board of Directors of the Company until

June 17, 2019

and who has been nominated for election to the Board of Directors in

2021.

Notes Payable

–

Seller Note

Effective

July 1, 2018,

the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD. Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of

$21

million,

$12

million of which was payable in cash at closing, with the remainder paid in the form of a subordinated promissory note issued by the Company in favor of a Seller (the “Seller Note”), which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement entered into in connection with the acquisition (the “Share Purchase Agreement”). The Seller Note bears interest at a rate of

four

percent (

) per annum and is payable in full

later than

June 30, 2023 (

the “Maturity Date”). The Maturity Date, with respect to any then-outstanding portion of the original principal amount which is subject to an indemnification claim by the Company (asserted in accordance with the terms of the Share Purchase Agreement) pending as of the date thereof, will be automatically extended until such time as any claim relating to such disputed amount is

longer pending, pursuant to the terms of the Seller Note and subject to additional conditions set forth therein and in the Share Purchase Agreement. The Company is

not

permitted to prepay any amounts due and owing under the Seller Note. Payment of the Seller Note is secured by a

second

-priority security interest in the assets of CAD. Interest accrued on the original principal amount is due and payable in arrears on the

first

day of each calendar quarter up to and including

June 30, 2023.

The Company is required to make quarterly principal payments, the amount of which is calculated based on a

four

(

) year amortization schedule, on the last day of each calendar quarter up to and including the Maturity Date. The holders of the Seller Note and the Company agreed to defer the quarterly principal payment due

June 30, 2020

until

June 30, 2023;

quarterly interest was paid on the Seller Note.

Paycheck Protection Program Notes

The Company applied for and was approved for a loan in the amount of

$3,679,383

(the “PPP Loan”) on

April 10, 2020

pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On

May 5, 2020,

the Company instructed JPMorgan to repay in full the Promissory Note pursuant to the Paycheck Protection Program under the CARES Act. On

June 4, 2020,

Federal Hose and CAD each entered into unsecured loans with First Federal Savings and Loan Association of Lakewood, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), in the amounts of

$253,071

and

$1,200,766,

respectively (the “PPP Loans”). The Company received notice of forgiveness from First Federal Savings and Loan Association of Lakewood of

100%

of the CAD and Federal Hose PPP loans on

January 2, 2021

and

January 29, 2021

respectively.

Notes payable consists of the following:

	March 31, 2021		December 31, 2020

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016. Refinanced on January 15, 2021.	$	-	$	1,108,829

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016. Refinanced on January 15, 2021.		-		941,867

In connection with the Komtek Forge acquisition, the Company refinanced the outstanding First Francis promissory notes, accrued interest payable through the refinance date and the assumed First Francis promissory note into one note on January 15, 2021 for a $3,779,784 loan due to First Francis Company, payable in quarterly installments beginning April 15, 2021.		3,779,784		-

In connection with the CARES Act, Federal Hose entered into a promissory note on June 4, 2020 for a $253,071 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installments scheduled to begin January 4, 2021. This note was fully forgiven on January 29, 2021.		-		253,071

In connection with the CARES Act, CAD entered into a promissory note on June 4, 2020 for a $1,200,766 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installments scheduled to begin January 4, 2021. This note was fully forgiven on January 22, 2021.		-		1,200,766

In connection with the CAD acquisition, the Company entered into a promissory note on July 1, 2018 for a $9,000,000 loan due to the Loudermilks, payable in quarterly installments beginning September 30, 2018.		5,625,000		6,187,500

Total notes payable		9,404,784		9,692,033

Less current portion		2,915,213		2,782,479

Notes payable – non-current portion	$	6,489,571	$	6,909,554